A Real Estate Discussion Blog

I'll try to keep this post some what relevant to real estate, but also just wanted to say that we had a great vacation.  Thanks to everyone who reached out before hand to offer tips and advice.  Below are links to the pictures I promised to post.  Being armed with so much knowledge definitely helped us spend more time enjoying our trip and less time sweating the details. 

We spent a couple of days in Bangkok and a week in Phuket.  The area is booming!  There was new construction everywhere.  So of course on guided tours when everyone was asking about elephants and restaurant recommendations, I was the geek asking how one goes about buying real estate as a foreigner. 

The simplest answer: marry a Thai, put everything in their name and let them complete the transaction. 

The more practical answer: You need to start a corporation to buy a home where you own 49% of the company and at least 5 Thais own the remaining 51%.  Once the sale goes through, the you can "buy out" the Thai shareholders.  There isn't a formula to doing this.  Typically you just give each of the shareholders around 500 baht (about $17 USD) and everyone goes on their own way.  Apparently there are people where this is all the do, they just become shareholders over and over.  And if the government were to ever ask about your specific deal, the shareholders wouldn't even know what to tell them because they do so many of these arrangements and rarely meet the owners.  

So my next question, what if you buy a condo, because then you aren't really buying land but rather air space.  Apparently it is a lot easier to own air than it is to own land.  The developer of the project who is actually buying the land still needs to apply the rules above.  But anyone can buy a condo.  However, the deal breaker here is that a certain percentage of all condo developments must be Thai owned (51% I believe).  So it is very important to consult with the managing broker to know how many units have been sold to foreigners before moving forward with a deal. 

It was interesting to hear how the Thais' attitude is to really remain in control of their land.  Especially when you compare this to some areas of the US where deals by foreigners are what is keeping the real estate market alive, since the dollar is so weak right now.  Would be an interesting debate to talk about which philosophy is better for the country because there are pros and cons to both approaches.

There was a big real estate conference going on while I was there.  I thought about popping in so that I could write the trip off as a business expense, but at the end of the day, the pool sounded like a much better way to pass time.  I am sure I'll be regretting this choice next April 15th. 

Overall, it was a wonderful trip.  I tried to make comments as to what on the pictures are on my facebook account at the links below.  Also, we spent so much time researching what to do on TripAdvisor, that I am going to be sure to return the favor by posting reviews myself.  Sort of like that 'take a penny, give a penny' dish at gas stations.  Most of the tours we took were highly recommended on TripAdvisor.  Of course when we got there we had to grill the tour owners about it.  Ironically many of them said their business was what it was today because of the site, but they had never even heard of it until a few months ago.  And because of the site, they are having to learn how to get better at email.  What a testament to the power of social networking.  But I'll save that soapbox for another day.

Laagorn Ka for now!

Picture with comments on Facebook.  You need to be logged into your Facebook account to see:

Part 1 - Getting to Bangkok and The Grand Palace

Part 2 - Bangkok continued and off to Phuket

Part 3 - Sunsets in Phuket and Day Sailing and Cave Exploring

Part 4 - Boating to islands in Phuket, including Phi Phi

Part 5 - More sunsets, Patong Beach and Elephant Trekking

Part 6 - Back to Bangkok, Jim Thompson House, Shopping

If you don't have a Facebook account, I uploaded all 412 pictures (warning there are a lot) to Shutterfly here. 

Tomorrow I am off on vacation for 2 weeks to visit Thailand!  I can't wait.  We are spending a few days in Bangkok and then heading to Phuket for a week.  Thank you to all the AR's who have sent me pictures and tips to help prepare for the trip. 

Here are 10 things I don't want to think about while I am gone:

- Shoveling snow.

- The crappy winter weather we have had in Chicago this year. (On track to be the 4th snowiest ever)

- Blogging (Sorry, but I need a break).

- The Transfer Tax Situation going on in Chicago right now. (FYI $10.50 per $1000 purchase price to close on a house starting April 1!)

- Zestimates.

- How much money I am losing on my investment properties in FL right now. (I know, think long term...)

- Cold weather that makes pipes freeze and burst and the ensuing parade of contractors to fix a destroyed basement. (Thank goodnes for insurance)

- Yahooadvertising. (My husband works here and talks about it obsessively, we don't "google" in my house.)

- The Chicago Property Tax bill I just had to pay, which was an expensive fiasco (I'll spare you the details, but they messed up my bill, again). 

- The impending raise of the Chicago Sales Tax to 10.25%. 

After reading my list, maybe I just need a break from Chicago taxes... too bad that won't happen.

So 90 degree weather and humidity, here I come!  I was thinking how out of touch I will feel by not visiting AR every day.  But something tells me I will get over that pretty quick....

See you in 2 weeks!

Sara

Recently Chicago home buyers got hit with a 40% increase in Transfer Stamp Tax.  After April 1, instead of paying $7.50 per $1000 when you close on a property, it will now cost you $10.50 per $1000 of the purchase price.  This new tax rate is to go into effect April 1, 2008. 

The news of this tax increase spurred some buyers to hurry up, get an offer in and close by this magic date.  Seems logical that if one were to close before April 1, one would avoid the additional $3 per $1000, right?  Not so fast, I just learned. 

I am currently working with a client where we hurried to find a home to purchase, got an offer accepted and set a closing date for March 31.  I just learned from our closing attorney that it turns out it isn't as important when you close, but rather when you actually buy and file the Transfer Stamps.  This is a task that your Title Company completes in the transaction.

Most Title Companies do not go down to city hall after each closing, but rather wait until they have a bulk of closing to go process.  So if you close on March 31st, but the Stamps don't get purchased for a few days later, you can be eligible for the the higher tax rate.  The end of the month is always a busy time for Title companies, and tihs month stands to be even busier, so the odds that they down to city hall by the end of office hours on that Monday is pretty slim. 

What can you do to try to avoid this situation?

1) Push your closing up as early as you possibly can, in order to give the Title Company adequate time to get the Stamps processed.

2) Hire a good Real Estate lawyer.  We are currently in the process of writing into the contract that the Seller will be responsible for any closing costs that occur after March 31st.  So on March 31, the closing statements will reflect a tax of $7.50/$1000.  But if the papers don't get files in time and the applicable tax rate is actually $10.50/$1000, we want the Seller to be responsible for this incremental amount.  Haven't heard yet if the Seller is going to agree to this.  For this particular contract it represents an increase of about $750.  Given current market conditions, I don't think the Seller wants to blow the whole deal over this amount.  But, you can see here how the $450 spent on a good Real Estate attorney could easily be re-cooped. 

It would be tight to get a new contract in and close by March 31st, for all you home buyers still sitting on the fence, but it could be done.  But also wanted to get this information out for any one with any outstanding contracts out there, in hopes of saving you a few dollars.

Zillow has been hinting that a product for Mortgage professionals is in the works for a few months now.  Well, we are almost ready to release it to the public.  But we are going to begin by offering to let select Mortgage professionals begin using the new tool few weeks before interfacing with customers and what better place to get that start then on AR! 

If you would like to be among the first to have free, instant, and unlimited access to Zillow consumers who are shopping for a loan, here is how you can get started. To participate in this new product offering, lenders must have their professional status confirmed prior to connecting with borrowers, so we want to give lenders a head start on the process:

1. Register with Zillow, if you haven't already.

2. Then apply as a lender, and answer a few questions about yourself.

3. While access to borrowers is free, a one-time application fee of $25 is necessary to cover the costs of having an independent third party confirm your professional and employment status to Zillow.  This is the only charge to participate; there are no other fees thereafter.

The confirmation process can take several days, which is why we wanted to give you a jump start.  By registering early, we can ensure you will be among the first to be notified when the product launches and ready to start serving borrowers.  We'll also send out an e-mail to all pre-confirmed lenders giving them notice immediately after launch.

I'll be sure to roll out more details as they become available, but for now I can say that the product is built around Zillow's model of openness and transparency, which is increasingly important in today's home lending environment.  And, consistent with our information-based model, we have no intention of being part of the transaction.  After speaking extensively to both consumers and mortgage professionals about the product, we're confident that all parties will ultimately benefit from Zillow's unique approach to home lending that is unlike any other in the market today.

So, sign up today to be one of the first to take part in this new approach to generating free leads and servicing people who are shopping for a loan.

Click here to read what other Bloggers are already saying about the service: 

Brian Brady, http://www.bloodhoundrealty.com/BloodhoundBlog/?p=2717

Greg Swann, http://www.bloodhoundrealty.com/BloodhoundBlog/?p=2710

Todd Carpenter, http://blog.mariah.com/2008/03/zillow-mortgages-to-give-loan-originators-absolutely-free-and-unlimited-access-to-consumers-looking-for-a-mortgage/

Blown Mortgage, http://blownmortgage.com/2008/03/06/zillow-launches-mortgage-lender-sign-ups-points-to-a-new-way-of-consumer-control-of-mortgage-process/

I often write about transparency on the Internet, and am usually all for it.  But tonight I just watched the show Moment Of Truth, where people are asked very personal questions and they get money for answering them honestly- whew, tough (don't waste your tivo space on it).  But the fact that this show exists, and that people watch it, further reinforces the type of transparency and access to information that people desire and expect in this day and age. 

When I think of other examples of total transparency two immediate examples come to mind:

1) Inman News Conference - Twice a year people pay hundred dollars plus the cost of travel to attend Brad Inman's news conferences in San Francisco and New York.  Interesting content is created by the speakers, panelists and audience.  Then what does Brad do with this valuable content when the conference is over?  He gives it away!  The weeks following the conference Brad features various sessions on his site, totally free to the public.  Is he worried that by giving away this valuable content people will quit attending his shows?  A 1.0 answer is yes.  A 2.0 answer is no.  Brad is a smart guy, if doing this would hurt his profit margins, he wouldn't do it.  But Brad knows that by being totally transparent about the types of conversations and debates that happen at the conference he can spark interest and potentially attract even more attendees to his next show.

2) Today in USA Today I read how Random House let readers download all 432 pages of Charles Bock's just released book, Beautiful Children for free the first three days it was out.  Further, this downloaded book could be emailed, shared or printed.  Aren't they worried that by giving away the farm this will hurt sales?  In the month that they book has been on the shelves, it has sold 12,000 companies, a good sales amount for a lesser-known author.  In the article M.J. Rose, who runs www.authorbuzz.com a marketing company for authors says, "we found we were selling more, not less, copies of the books we were giving away". 

Today people want all the information.  They want it on their terms.  They want it now.  And they want a lot of it for free.  Does ability for home buyers and sellers to collect mounds of data on their own ultimately cut into a Realtor's business?  If we answer that question based on the principles of the above two examples, the answer is no.  And if fact, when putting transparent, honest and interesting content out there on the web, it appears you get it back in spades. 

So for all you out there who bank on not displaying a listing address because you want the person to call you for it, this is something to think about.  I can guarantee doing a full disclose of your property listing details will be much easier to disclose than some of the question this  poor women had to answer on national television!  Ultimately though it paid off big for her and she won $100,000.  It can pay off big for you too.